Succession Planning: Safeguarding Your Future

Transcription

1 Vermont Bar Association 60th Mid-Year Meeting Seminar Materials Succession Planning: Safeguarding Your Future March 30-31, 2017 Equinox Resort & Spa Manchester Center, VT Speaker: Julius Ciembroniewicz, Esq.

2 ROADMAP FOR SUCCESSFUL LAW FIRM TRANSITIONS AND EXITS: SAFEGUARDING YOUR FUTURE Vermont Bar Association 2017 Mid Year Meeting JULIUS CIEMBRONIEWICZ, ESQ. What is Succession Planning? Subset of Strategic Planning Firm Growth Practice Transitions Management Succession 1

3 Obstacles/Excuses Inertia or aversion to planning Concern over lawyer retention Concern over client retention Lack of viable successor Over reliance on compensation plan What happens if no Succession Planning? 2

4 NO Consequences Loss of senior talent and leadership Loss of key clients Unfunded retirement for owners Inability of firm owners, especially founders, to capitalize on goodwill and sweat equity built up over the years Defections and firm break ups Conflict Baby Boomers Tsunami No other force is likely to shape the future of national health, public finances and policy making as the irreversible rate at which the world s population is aging. Standard and Poor s Analysis on Aging 1980 lawyer population 55 and older: 25% 2005 lawyer population 55 and older: 34% 2013 lawyer population 55 and older: 65% 3

5 What are firms doing? Firms (of all sizes) are setting up SPs Founders want to ensure firm: Continues next gen leadership and management Retains existing client and referral relationships Finances buyouts Solo Practitioners Hire and Groom Associate Sell Firm to Another Lawyer or Law Firm Merge Of Counsel Turn lights out Small, Mid Size & Large Law Firms Transition Clients Transition Management What are SP challenges? Client Transitions Major challenge Not an individual responsibility; firm responsibility Obstacles Management Transitions Managing Partner, Management Committees, etc. 4

6 Change is Challenging How do you get founding and/or senior partners to relinquish control and power? How do you get younger partners with leadership skills to take on and focus on the role? A.G. Lafley, Chairman, President and CEO of Proctor & Gamble, 2000 to 2010, 2013 to Planning for leadership succession is the most important job of a company s board of directors. Harvard Business Review, October Create a Phase Down Program Why? To retain and achieve maximum value during transitions Make the plan a win win win Focus on retaining or re creating maximum value for the firm Lead Time Knowledge/Expertise 5

7 Transition Assets Legal expertise Client relationships, and relationship building skills Business Development skills Firm management and leadership Practice management and leadership Profitability and cash flow Client Relations Leadership Pipeline FIRM Retiring Owners Retiring Owner(s) Engagement Planning Retirement Transition Goals Retain and motivate valued senior lawyers Fairly compensate individuals Maintain excellent client service Avoid service gaps or hurried hand offs Integrate new lawyers Develop any needed capability in successors Retain and expand client relationships Avoid Surprises 6

8 Retiring Owner(s) cont. Continuation Plans: Of Counsel Benefits to Firm Expertise Institutional Knowledge Client relationships Mentoring Stabilizing Force Provide Support for Transitional Owners Client Transitions Fair and equitable compensation that drives good outcomes is certainly a critical aspect of most if not all transitions. Nevertheless, it is even more critical to consider preservation of the firm s transition assets first. Client Transitions Relationship Partner Agreement Opportunity assessment and plan Client meetings Implement the plan 7

9 Develop Leadership Pipeline Invest in the Future Hire Associates for the Long Term Implement a Law Firm Associate Career Plan Associate Performance Evaluations Mentoring: Get the Basics Right Leadership Training Business Development Training Exposure Energy and Focus Align Compensation with Firm s Goals Transition to next generation of attorneys in the firm legal skills leadership and management client relationships Establish Goals and Timelines Implement 8

10 Lateral Equity Partner Candidates Should you consider a lateral? Recent Altman Weil survey, 94% of law firm respondents ID d lateral hiring as one of the cornerstone strategies for growth. When to start? NOW Consequences of waiting too long Timing Important How to start? 1) Conduct a demographic analysis of the ages of your lawyers 2) Using same demographic breakdown by age range, show billing totals 9

11 How to start? Be Proactive this is Succession Planning SP should be part of practice, part of strategic planning, part of firm culture Start Transition Dialogue with Owners Identify Leaders Invest in Leaders Assess Leader Competencies Determine and Support Successor s Developmental Needs Unexpected Departure Scenarios Death or disability Departure to another law firm Judicial appointments No retirement notice Discussion/Questions 10

12 QUESTIONS? Northeast Legal Solutions Julius Ciembroniewicz, Esq